JPMorgan, the most significant bank in the U.S. in terms of assets under management, has established a fresh collaboration with six major Indian banks. The primary objective of this partnership is to initiate a pilot program aimed at testing a blockchain-based platform for the settlement of interbank dollar transactions.
According to a Bloomberg report, JPMorgan’s banking division will work with Gujarat International Finance Tec-City, also known as GIFT City, to trial a new platform that enables interbank settlement of U.S. dollar transactions. This partnership will include HDFC Bank, ICICI Bank, Axis Bank, Yes Bank, and IndusInd Bank.
Kaustubh Kulkarni, the Senior Country Officer for India and Vice Chairman for the Asia Pacific region at JP Morgan has stated that “We will be running a pilot project for the next few months as we need to analyze banks’ experience.”
The action comes as New Delhi works to establish GIFT City as an alternative to trading hubs like Singapore and Dubai and a global financial center. The Reserve Bank of India has also launched a domestic dollar-settled non-deliverable futures market in GIFT City as part of this effort.
According to Kulkarni, the purpose of the new blockchain initiative is to increase the capacity of the current settlement system. The platform would enable the banks to conduct instant transactions around the clock.
Transactions can take several hours to complete under the present settlement mechanism, and the service is not accessible on Saturdays, Sundays, or federal holidays.
Kulkarni added, “By leveraging blockchain technology to facilitate transactions on a 24×7 basis, the processing is instantaneous and enables GIFT City banks to support their own timezone and operating hours.”
JPMorgan is set to launch a pilot project using its Onyx blockchain platform, designed for wholesale payment transactions. The project is expected to begin on Monday, pending final approval from the International Financial Services Centre Authority. The platform has already been adopted by several banks, including Goldman Sachs, DBS Bank, and BNP Paribas, and 15 more banks and broker-dealers have expressed interest in joining. The goal of the project is to enhance the quality of wholesale payment transactions using blockchain technology.
JPMorgan has processed nearly $700 billion in short-term loan transactions using its Onyx platform, and customers have been able to trade tokens representing ownership rights to U.S. Treasuries and use JPM Coin, a blockchain bank account. The bank plans to focus on tokenizing assets that are difficult to finance, such as money-market funds, and use them as collateral. JPMorgan also aims to expand Onyx to issue a wider range of blockchain-based assets, including private funds. In February, the bank announced its plans to open a crypto innovation lab in Athens to support the development of blockchain technology, AI, and cryptography.
